By Kopano Gumbi
South Africa’s central bank said on Tuesday that the scope for monetary policy easing had narrowed because of the highly uncertain global backdrop.
In a biannual review of its monetary policy, the South African Reserve Bank (SARB) said the global trade war started by U.S. President Donald Trump was a serious threat to global economic activity, with spillovers expected for South Africa.
Although it expects domestic inflation to slow to 3.6% this year from 4.4% last year, its confidence about the medium-term outlook “has reduced significantly due to heightened global trade tensions and elevated domestic uncertainties”.
The SARB tries to keep inflation around the midpoint of its 3% to 6% target band, with the latest reading at 3.2% in February.
At its last policy meeting in March it held its key rate at 7.50%, citing risks from Trump’s tariffs and a dispute over South Africa’s national budget that has
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